New Senators Letter to Anderson

[zephyr17]

At some point Amtrak management has to directly ask these Congress critters this question: "Are we to be run as a business or a government service?" Technically Amtrak is under a mandate to be run like a business, but every time they do something that a for profit business would do, Congress goes up in arms about it. So which is it? Amtrak is finally saying it can't be both ways.

History is pretty clear about that. While the "for profit" was included in the 1970 legislation in order to get it to pass, no one really expected it and, in fact, the expectation was Amtrak would die within about five years. It is not 1971 any more, and the track record over the last 48 years shows that the real expectation is basically that Amtrak run the required services in as business-like and efficient manner as possible (they often don't, but that is another story), but Amtrak IS expected to provide those services.

Congress has always gotten up in arms about Amtrak one way or another, pro or con. As Neorden and other posters have pointed out, Amtrak is a creature of Congress and the bottom line is Congress controls however much they what they want to control when it comes to Amtrak. The Senate has made very clear that they want to maintain the National Network. And Amtrak ultimately will follow the Golden Rule, he who has the gold makes the rules.

Congress has asked and answered that question every year for 48 years by approving the Amtrak subsidy, it isn't a new question.

 

[neroden]

At some point Amtrak management has to directly ask these Congress critters this question: "Are we to be run as a business or a government service?" Technically Amtrak is under a mandate to be run like a business, but every time they do something that a for profit business would do, Congress goes up in arms about it. So which is it? Amtrak is finally saying it can't be both ways.

Complete nonsense. Perhaps you don't know what's really going on.

Amtrak is arguably currently run like Enron or Worldcom, not like a real for-profit business.

Look at this:

https://www.railpassengers.org/happ...e-accounting-fatally-flawed-misleading-wrong/

A real for-profit business gets its accounting right, first and foremost. It uses true marginal-cost accounting (aka avoidable-cost accounting) to figure out which opportunities are profitable.

Amtrak's accounting is so ass-backwards that they have no idea what's profitable and what's not. That's no way to run a business (and no way to run a railroad, as the Milwaukee Road found out.)

----
Those of us who have tried to dissect the innards of Amtrak's opaque and dishonest accounting have come to a few conclusions:
(1) Most of the long-distance trains actually turn a profit, in the sense that cancelling any one, or two, would require larger Congressional subsidies. (Some are clearer than others: Auto Train, all of Silver Service, LSL, and Empire Builder are definitely substantially profitable. Sunset Limited really does cost a lot to run each year. Most of the others are floating around breakeven plus or minus 5 million a year, and I don't trust the retro-estimated numbers much closer than that.)
(2) Food service in transportation businesses should be measured by how much it increases ticket yields, which Amtrak isn't even *measuring* as far as we can tell
(3) At least on the Lake Shore Limited, sleeper cars are more profitable than coach cars.
(4) Railroading is an economies of scale business with a multiplier effect from frequency of service; until demand is totally sated, more trains per day on the same route means more profit (so where's our second LSL? And why are there still three-a-day trains?)
(5) Railroading has network effects; connectivity between trains, and between trains and other transportation, means more profit (so why aren't you going into Miami Airport, Amtrak?!? Why does the LSL misconnect with the Vermonter in Springfield MA?)

Does Amtrak management understand *any* of this? I wouldn't fund a private railroad business if they didn't have a business plan which showed their understanding of (a) economies of scale, (b) network effects, (c) marginal (avoidable) costs, and (d) amenites as a method of increasing ticket yields. Amtrak is not managed in a businesslike manner right now. If I were CEO, I'd fix that.

I think there's a lot of (bad, dishonest) history here. For most of the 1980s, nearly all Amtrak services really were taking in less revenue than their marginal costs. This changed in the mid-1990s, and now they're nearly all profitable. I know Penn Central used dishonest accounting to disguise their losses, and I suspect that Amtrak inherited a lot of their bogus accounting. I also suspect Amtrak accounting was deliberately kept filled with fog and clouds by Graham Claytor in the 1980s to disguise the nature of their losses AT THE TIME -- this is probably still being done out of habit even though it's no longer relevant now that the trains are profitable.

I now know for a fact that there was a political move to separate the "national network" from the "NEC" in the early 2000s done by a political operative (met him) on the theory that the "national network" would always be safe thanks to the Senate but the NEC needed to look better financially than it did at the time. This was a stupid theory, as the national network needs defense just as much as the NEC.

----
The correct presentation of the Amtrak accounts would separate fixed "overhead" costs which have to exist just to keep the lights on (which are actually most of the costs) from variable/avoidable costs which accrue from running a particular service. Amtrak still refuses to do this despite being ordered to by Congress at least twice.

Instead, Amtrak's fake accounting randomly assigns fixed costs onto trains, pretending that they are variable costs to make them look less attractive. And it doesn't even do it in a plausible manner -- it assigns costs of Penn Station to trains which don't go there, etc.

This accounting failure is, of course, bad business practice; it prevents Amtrak management from making any sound business decisions.

In addition, it is politically idiotic. The politics at this point are that nearly every member of Congress wants at least ONE train running. If you can point out that once the lights are turned on and one train is running, all the other trains are actually producing a marginal profit and reducing the needed Congressional subsidy (which is pretty close to true at this point, apart from the Sunset Limited), you get everyone supporting additional train service.

 

[Thirdrail7]

So far, this group has routinely shrugged off criticism and threats. The Southwest Chief funding debacle aside, I haven't seen any real consequences for bucking the whims of Congress.

 

[tricia]

At some point Amtrak management has to directly ask these Congress critters this question: "Are we to be run as a business or a government service?" Technically Amtrak is under a mandate to be run like a business, but every time they do something that a for profit business would do, Congress goes up in arms about it. So which is it? Amtrak is finally saying it can't be both ways.

May I request that posters avoid using the phrase "Congress critters"? It's disrespectful of a national, public institution--and (at least IMHO) akin to waving a partisan political ID flag. Which the moderators of this forum generally ask us to avoid.

 

[WICT106]

Complete nonsense. Perhaps you don't know what's really going on.

Amtrak is arguably currently run like Enron or Worldcom, not like a real for-profit business.

Look at this:

https://www.railpassengers.org/happ...e-accounting-fatally-flawed-misleading-wrong/

A real for-profit business gets its accounting right, first and foremost. It uses true marginal-cost accounting (aka avoidable-cost accounting) to figure out which opportunities are profitable.

Amtrak's accounting is so ass-backwards that they have no idea what's profitable and what's not. That's no way to run a business (and no way to run a railroad, as the Milwaukee Road found out.)

----
Those of us who have tried to dissect the innards of Amtrak's opaque and dishonest accounting have come to a few conclusions:
(1) Most of the long-distance trains actually turn a profit, in the sense that cancelling any one, or two, would require larger Congressional subsidies. (Some are clearer than others: Auto Train, all of Silver Service, LSL, and Empire Builder are definitely substantially profitable. Sunset Limited really does cost a lot to run each year. Most of the others are floating around breakeven plus or minus 5 million a year, and I don't trust the retro-estimated numbers much closer than that.)
(2) Food service in transportation businesses should be measured by how much it increases ticket yields, which Amtrak isn't even *measuring* as far as we can tell
(3) At least on the Lake Shore Limited, sleeper cars are more profitable than coach cars.
(4) Railroading is an economies of scale business with a multiplier effect from frequency of service; until demand is totally sated, more trains per day on the same route means more profit (so where's our second LSL? And why are there still three-a-day trains?)
(5) Railroading has network effects; connectivity between trains, and between trains and other transportation, means more profit (so why aren't you going into Miami Airport, Amtrak?!? Why does the LSL misconnect with the Vermonter in Springfield MA?)

Does Amtrak management understand *any* of this? I wouldn't fund a private railroad business if they didn't have a business plan which showed their understanding of (a) economies of scale, (b) network effects, (c) marginal (avoidable) costs, and (d) amenites as a method of increasing ticket yields. Amtrak is not managed in a businesslike manner right now. If I were CEO, I'd fix that.

I think there's a lot of (bad, dishonest) history here. For most of the 1980s, nearly all Amtrak services really were taking in less revenue than their marginal costs. This changed in the mid-1990s, and now they're nearly all profitable. I know Penn Central used dishonest accounting to disguise their losses, and I suspect that Amtrak inherited a lot of their bogus accounting. I also suspect Amtrak accounting was deliberately kept filled with fog and clouds by Graham Claytor in the 1980s to disguise the nature of their losses AT THE TIME -- this is probably still being done out of habit even though it's no longer relevant now that the trains are profitable.

I now know for a fact that there was a political move to separate the "national network" from the "NEC" in the early 2000s done by a political operative (met him) on the theory that the "national network" would always be safe thanks to the Senate but the NEC needed to look better financially than it did at the time. This was a stupid theory, as the national network needs defense just as much as the NEC.

----
The correct presentation of the Amtrak accounts would separate fixed "overhead" costs which have to exist just to keep the lights on (which are actually most of the costs) from variable/avoidable costs which accrue from running a particular service. Amtrak still refuses to do this despite being ordered to by Congress at least twice.

Instead, Amtrak's fake accounting randomly assigns fixed costs onto trains, pretending that they are variable costs to make them look less attractive. And it doesn't even do it in a plausible manner -- it assigns costs of Penn Station to trains which don't go there, etc.

This accounting failure is, of course, bad business practice; it prevents Amtrak management from making any sound business decisions.

In addition, it is politically idiotic. The politics at this point are that nearly every member of Congress wants at least ONE train running. If you can point out that once the lights are turned on and one train is running, all the other trains are actually producing a marginal profit and reducing the needed Congressional subsidy (which is pretty close to true at this point, apart from the Sunset Limited), you get everyone supporting additional train service.

Word.

 

[bretton88]

May I request that posters avoid using the phrase "Congress critters"? It's disrespectful of a national, public institution--and (at least IMHO) akin to waving a partisan political ID flag. Which the moderators of this forum generally ask us to avoid.

I will avoid using it in the future, I was unaware that it was disrespectful and no partisanship was implied.

 

[JAM95]

Complete nonsense. Perhaps you don't know what's really going on.

Amtrak is arguably currently run like Enron or Worldcom, not like a real for-profit business.

Look at this:

https://www.railpassengers.org/happ...e-accounting-fatally-flawed-misleading-wrong/

A real for-profit business gets its accounting right, first and foremost. It uses true marginal-cost accounting (aka avoidable-cost accounting) to figure out which opportunities are profitable.

Amtrak's accounting is so ass-backwards that they have no idea what's profitable and what's not. That's no way to run a business (and no way to run a railroad, as the Milwaukee Road found out.)

----
Those of us who have tried to dissect the innards of Amtrak's opaque and dishonest accounting have come to a few conclusions:
(1) Most of the long-distance trains actually turn a profit, in the sense that cancelling any one, or two, would require larger Congressional subsidies. (Some are clearer than others: Auto Train, all of Silver Service, LSL, and Empire Builder are definitely substantially profitable. Sunset Limited really does cost a lot to run each year. Most of the others are floating around breakeven plus or minus 5 million a year, and I don't trust the retro-estimated numbers much closer than that.)
(2) Food service in transportation businesses should be measured by how much it increases ticket yields, which Amtrak isn't even *measuring* as far as we can tell
(3) At least on the Lake Shore Limited, sleeper cars are more profitable than coach cars.
(4) Railroading is an economies of scale business with a multiplier effect from frequency of service; until demand is totally sated, more trains per day on the same route means more profit (so where's our second LSL? And why are there still three-a-day trains?)
(5) Railroading has network effects; connectivity between trains, and between trains and other transportation, means more profit (so why aren't you going into Miami Airport, Amtrak?!? Why does the LSL misconnect with the Vermonter in Springfield MA?)

Does Amtrak management understand *any* of this? I wouldn't fund a private railroad business if they didn't have a business plan which showed their understanding of (a) economies of scale, (b) network effects, (c) marginal (avoidable) costs, and (d) amenites as a method of increasing ticket yields. Amtrak is not managed in a businesslike manner right now. If I were CEO, I'd fix that.

I think there's a lot of (bad, dishonest) history here. For most of the 1980s, nearly all Amtrak services really were taking in less revenue than their marginal costs. This changed in the mid-1990s, and now they're nearly all profitable. I know Penn Central used dishonest accounting to disguise their losses, and I suspect that Amtrak inherited a lot of their bogus accounting. I also suspect Amtrak accounting was deliberately kept filled with fog and clouds by Graham Claytor in the 1980s to disguise the nature of their losses AT THE TIME -- this is probably still being done out of habit even though it's no longer relevant now that the trains are profitable.

I now know for a fact that there was a political move to separate the "national network" from the "NEC" in the early 2000s done by a political operative (met him) on the theory that the "national network" would always be safe thanks to the Senate but the NEC needed to look better financially than it did at the time. This was a stupid theory, as the national network needs defense just as much as the NEC.

----
The correct presentation of the Amtrak accounts would separate fixed "overhead" costs which have to exist just to keep the lights on (which are actually most of the costs) from variable/avoidable costs which accrue from running a particular service. Amtrak still refuses to do this despite being ordered to by Congress at least twice.

Instead, Amtrak's fake accounting randomly assigns fixed costs onto trains, pretending that they are variable costs to make them look less attractive. And it doesn't even do it in a plausible manner -- it assigns costs of Penn Station to trains which don't go there, etc.

This accounting failure is, of course, bad business practice; it prevents Amtrak management from making any sound business decisions.

In addition, it is politically idiotic. The politics at this point are that nearly every member of Congress wants at least ONE train running. If you can point out that once the lights are turned on and one train is running, all the other trains are actually producing a marginal profit and reducing the needed Congressional subsidy (which is pretty close to true at this point, apart from the Sunset Limited), you get everyone supporting additional train service.

Agreed.
I'm confused: Amtrak is expected by the bean counter politicians to operate like a business?
So why is it that Congress has said that Amtrak cannot offset costs of long distance lines with profits from profitable lines like the Northeast Corridor?

And I'm with you on the airport connectivity. Another one needing a connection: Amtrak goes right next to T. F. Green Airport in Providence, yet Amtrak has no station like it has for BWI or Newark.

 

[tricia]

Amtrak doesn't bother to help with connectivity to CARS, let alone planes, buses, other trains.... It's really difficult to figure out whether you'll actually be able to leave your car at way too many stations. And to figure out whether a rental car agency can pick you up at an Amtrak station, or if it's a reasonable walk---well, you're on your own with that. Why Amtrak's marketing department doesn't think any of this matters has baffled me for years.

 

[Amtrakfflyer]

Agreed thankfully Enterprise has been very helpful with pick ups. Our trip last week started with a one way Enterpise from our house to GBB and ended with Enterprise picking us up in SAC when we got off the Zephyr. All on our own though no help or mention from Amtrak and the trip would not have been as seemless or even possible without Enterprise and their cars. The bad part is most locations close at 6pm.

Amtrak really needs to get involved in rentals and agreements with local rental outlets.

 

[pennyk]

MODERATOR NOTE: Off topic and political posts have been removed from this thread. Thank you for keeping the discussion focused on the Senators' letter to Anderson.

 

[AmtrakWPK]

If you leave Senators in charge of the Amtrak system, you'll get more "Byrd ****" rather than trains where people actually live and/or want to go to. If they want to expand to Las Vegas, Nashville, or Columbus, go right ahead. But I have no interest traveling to Hays, Kansas (wherever that is) or paying more taxes just so there can be trains to go there.

It's not really a question of whether you want to go there or whether I want to go there. The whole point is to have a NATIONWIDE rail system. Coverage of the entire Nation. It's not SUPPOSED to be a rail system to favorite cities. There are probably LOTS of places AMTRAK should be designed to serve along the way that neither of us wants to go to. And I am perfectly happy to have my tax dollars subsidize that. Because AMTRAK is supposed to be a NATIONWIDE rail system, instead of the current death by a thousand cuts because AMTRAK forgot their original focus, abandoned their original MISSION, and built a web of financial deceit trying to make the long-distance trains themselves the financial fall-guy when in fact they are not. I am delighted to see some in Congress are growing a backbone and at least attempting to kick AMTRAK's butt into gear. I wish them luck.

 

[Siegmund]

Where are senators from Montana, North Dakota, Utah, et al. Long way to go on this front.

Am happy to report that one of my Montana senators is a signatory, and my other Montana senator has applied some pressure in senate subcommittee meetings (he was specifically trying to get back live agents at the Montana stations that lost them this year) and released a statement the same day this new letter came out. It's the first time I've seen Senator Daines lift his finger for anything. In relative terms, I was quite impressed.

 

[Thirdrail7]

Apparently, this letter hasn't been answered either and the appointment of board members may be on hold until questions are answered. Click on the link for the full article.

Senate to Amtrak: Explain What You're Doing To Rail Passenger Service In Kansas
https://www.kcur.org/post/senate-am...-doing-rail-passenger-service-kansas#stream/0

Long-running frustration about Amtrak’s willingness to keep a rail passenger line running through remote parts of the country has politicians threatening to block new directors to the agency.

A handful of U.S. senators demanded specifics by this week about how Amtrak plans to spend an added $50 million to keep the Southwest Chief line running from Chicago, through Kansas, to Los Angeles.

Hoping to force Amtrak to make long-term promises of keeping the Southwest Chief line, U.S. Sen. Jerry Moran of Kansas had already used the power each senator holds to put a legislative block on the appointment of three nominees waiting to join the passenger rail agency’s board of directors.

Amtrak still has not specified when it will answer the pending questions from the Senate. A spokeswoman from Moran’s office said Amtrak has made contact, but not with answers about how it plans to alter long-distance routes or how the rail service calculates what states must chip in to support service.

“(Moran) will maintain those holds (on the nominations until he gets) assurances from Amtrak that it will continue to fund the Southwest Chief and funds that rail service,” said Moran spokeswoman Morgan Said.

If enough Senators get on board, this can impact Gateway.

 

[Ryan]

Good. Put a boot in their @$$.

 

[Thirdrail7]

After Senator Moran delayed the confirmation of appointments to the board of directionless, Mr. Anderson has agreed to a meeting. We should have a better idea after May 22nd.

U.S. Sen. Moran playing hardball to preserve Amtrak service in Kansas
https://www.gctelegram.com/news/201...hardball-to-preserve-amtrak-service-in-kansas

U.S. Sen. Jerry Moran delayed action on confirmation of three nominees to Amtrak’s board of directors to encourage the company to make a commitment to maintaining operation of passenger rail service on the Southwest Chief’s route through rural communities in Kansas.

Amtrak executives have yet to offer assurances of another year of operation for Southwest Chief, which runs daily from Chicago to Los Angeles and makes stops in Lawrence, Topeka, Newton, Hutchinson, Dodge City and Garden City.

Richard Anderson, Amtrak’s president, agreed to a May 22 with Moran and other senators to discuss future of the rail line.

“As the divide between urban communities and rural communities in America continues to expand, passenger rail services, like the Southwest Chief, are necessary in connecting Kansans to the rest of the country,” said Moran, a Kansas Republican.

Are you watching, Pennsylvania?

Probably not.

 

[jis]

They really need to haul Coscia and the Board on the gangplank, together with Anderson and Gardner, put them all under oath and then have a go at them.

 

[Seaboard92]

They really need to haul Coscia and the Board on the gangplank, together with Anderson and Gardner, put them all under oath and then have a go at them.

Exactly. I would probably even go up to meet with the good senators staff before that as well.

 

[Amtrakfflyer]

I hope the Senators are well prepared and prepped for a barrage of skewed facts and possibly outright lies. Hopefully RPA is involved.

The Senators need to be able to respond immediately during the meeting not let it go and hope Anderson comes back in another 6 months after more damage has been done.

Anderson and company have to be put in check once and for all so we can get on with what really needs to be done to improve Amtrak.

This weeks announcement of surplus Superliners for auction (wrecked or partially gutted for retrofit) should be sending chills down the spines of all rail advocates. Again it shows Anderson’s agenda.

 

[AmtrakBlue]

I hope the Senators are well prepared and prepped for a barrage of skewed facts and possibly outright lies. Hopefully RPA is involved.

They should be already used to that - skewed facts and lies - by now.

 

[Seaboard92]

Honestly I wouldn’t trust Amtrak, RPA, AAPRCO, RPCA, or really any other group. Each group has its own biases and I’m not sure I can trust any of them. I have a bias towards PVs and everyone knows that.

 

[Acela150]

They really need to haul Coscia and the Board on the gangplank, together with Anderson and Gardner, put them all under oath and then have a go at them.

I agree with you. They need answers from the entire spectrum here. Not just the leader of the company, who as has been stated is taking his orders from the board.

Honestly I wouldn’t trust Amtrak, RPA, AAPRCO, RPCA, or really any other group. Each group has its own biases and I’m not sure I can trust any of them. I have a bias towards PVs and everyone knows that.

You don't say.......

 

[Larry H.]

The Senators should all be required to at least once a year unannounced ride one of the long distance trains from end to end. Then perhaps they would see the folly and disaster that destroying the diners has been. Plus they could experience the shabby condition of many sleepers an coaches. Plus they could see the hundreds of passengers boarding in cites like Chicago which are one of he few hub cities. If we have more hubs and let riders get where they want to go far easier the passenger loads would be way higher. Yes the government would have to cove the cost, but hey they seem to have found two trillion dollars to throw at infrastructure so it should be easy to maintain the original web of connecting cities Amtrak had when they took over. That is the real cure to much of the issues with ridership.

 

[Ryan]

The Senators should all be required to at least once a year unannounced ride one of the long distance trains from end to end.

While I am supportive of the notion that Senators should have a better understanding of what they regulate, this would be entirely unworkable when taken in the whole. That’s why they have staff members to make them smart.

 

[Amtrakfflyer]

Along the same lines if the Senator/House member can’t they should send a staffer. Both should have option of bringing family with them as well. More eyes the better.

 

[Thirdrail7]

When is the last time a board member had to testify in front on Congress?

Has it ever happened?